AB-InBev to buy Goose Island brewpub in Chicago

Are we right in detecting a new strategy here? When in 2011 AB-InBev began its craft shopping spree, it bought out Chicago’s Goose Island brewery except for one thing: the brewpub where it all started in 1988.

On 19 February 2016 Chicago media reported that now AB-InBev has purchased that from the brewery’s founder John Hall, 73, too. Terms of the deal, which is expected to close in 60 days, were not disclosed.

The funny thing about the purchase is that in 2011 AB-InBev did not have much interest in the brewpub. “They didn’t understand the value, which they do now,” Mr Hall commented. They couldn’t buy it under the state of Illinois law at the time, anyway.

Apparently, they have changed their mind. According to the trade publication Beer Marketers Insights, AB-InBev is already pushing hard into the retail tier of the Three Tier System. AB-InBev is believed to own 15 brewpubs in the U.S. following its acquisitions of several craft brewers over the past two years. Media reported that AB-InBev plans to open 10 Barrel brewpubs (the original one it bought in Portland, Oregon in 2014) in both Denver and San Diego.

Whether AB-InBev hopes to turn Goose Island into another chain of brewpubs and thus become a restaurateur on an even larger scale, only time will tell. But one should bear in mind that there is a precedent: Since 2010 one of AB-InBev’s Brazilian investors, Jorge Lemann, through his private equity fund 3G Capital, has also been pulling the strings at the global fast food chain Burger King.

The even funnier aspect to the Goose Island transaction is that AB-InBev too benefits from a change in Illinois law which originally was meant to serve the craft brewers. It has since become legal for brewers to operate taprooms. Therefore, AB-InBev can reclassify the Goose Island brewpub as a taproom subsidiary of the company’s Fulton Street production brewery and even serve food. But – and here it gets really bizarre – it will no longer be able to sell wine or spirits.

To underline how loony the Three Tier System, which regulates alcohol in the U.S., has become: in Illinois AB-InBev can become a retailer/taproom operator. However, it cannot own distributors. After a protracted legal case, in 2013, AB-InBev was forced to sell its minority interest in an Illinois beer distributor, which it had held for years. Nonetheless, in plenty of other U.S. states it’s legal for AB-InBev to own distributors, which is why it already ranks as the biggest beer distributor in the U.S., ahead of the privately-owned Reyes Beverage Group.